For General Electric Co. GE, -2.90% investors who might have done a double take when they saw their stock trading above $100, the reason is because the 1-for-8 reverse stock split the industrial conglomerate proposed earlier this year just went into effect. The stock rose 2.1% in morning trading to $105.80, which implies a pre-split adjusted price of about $13.23.
The stock’s new split-adjusted record close is Aug. 28, 2000’s $461.40. GE had said in March that it wanted to implement the reverse split, which is typically effected by companies looking to boost their share price to avoid delisting or to make it appear more attractive to certain institutional investors, because the company wanted to “decrease the number of shares outstanding to a number more typical of companies with comparable market capitalization.” GE’s current market cap is about $116.1 billion. As of June 30, GE had 8.78 billion shares outstanding; the reverse split multiplies the stock price by eight but also divides the shares outstanding by eight, to bring it down to about 1.10 billion shares. In comparison, fellow S&P 500 SPX, -0.18% components 3M Co. MMM, -0.21%, with a market cap of $115.4 billion, has 578.6 million shares outstanding as of June 30, and Caterpillar Inc. CAT, -0.77%, with a market cap of $114.8 billion, had 547.8 million shares outstanding as of March 31, according to their latest 10-Q filings.